DAVID LAWS, the former chief secretary to the Treasury, has increased pressure on the chancellor George Osborne to raise the income tax threshold to £10,000 in next month’s Budget, saying it was time to signal the end of austerity on household budgets.

Laws told BBC’s Newsnight yesterday that the Liberal Democrats would fund the move – which would cost the Treasury some £9bn – by halving the higher rate of tax relief on pensions from 40% to 20%, City AM reported.

The Lib Dems would target the top five per cent of earners, which equates to those earning around £60,000 and above, he said.

Laws, a close aide to Nick Clegg, said high earners had done too well out of the tax system, arguing that all of the tax relief has gone to the very most affluent people in society.

“We can make changes that take away some of the subsidies that are going to the top one per cent or five per cent of the income distribution and get them to where they’re really needed – those on low and middle incomes”, he said.

Laws said increasing the income tax threshold would give the government the chance “of ending the austerity on household budgets.”